TaxTMI 
TaxTMI 
2011 (12) TMI 51
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....at the depreciation on leased assets can be allowed in a year when the assets had not yet been put to use by the lessee ? Substantial question of law No:1 3. The first question, namely, whether the collection of 'contingency deposit' by the assessee against the payment of sales tax, would form part of the income or not, is no more res integra, as it has already been answered against the assessee, by the decision rendered by a Division Bench of this Court reported in COMMISSIONER OF INCOME-TAX .vs. SOUTHERN EXPLOSIVES CO., ((2000) 242 ITR 107 (Mad), wherein it has been held that 'the receipt of the amount for payment of sales tax and keeping it in deposit would amount to a "revenue receipt" and it would form part of the assessee's income'. Hence, in view of the dictum laid down in the said judgment, we are of the view that the finding rendered by the Appellate Tribunal is liable to be set aside. Accordingly, the same is hereby set aside in both the appeals and the said question is answered in favour of the revenue. Substantial question of law No:2 4. The brief facts, which are necessary to decide the second substantial question of law, are as ....
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....reciation claim at best can be considered only in the subsequent year...". 5. It is the contention of the revenue that the boiler was put to use only on 06.05.1997 on which date, the power plant actually started producing energy and it could not have been put to use otherwise also before 06.05.1997 as the sugar plant started production of sugar only from 19.01.1998; that the boiler is part of the co-generation power plant and in such circumstances, it is clear that the boiler was put to use only on 06.05.1997. So, the claim of 100% depreciation made by the assessee for the year 1996-97 is not in accordance with the provisions of the Income Tax Act as the boiler had not been put to use before 31.03.1997. The depreciation claim, at best, can be considered only in the subsequent year and not for the year 1996-97. 6. It is the further case of the revenue that the lease rental accrued on the boiler was not accounted as on 31.03.1997. As per the provisions of section 145 of the Income Tax Act, the assessee is supposed to recognise the income on accrual basis. The Board has also issued a Notification No.S.O.69(E) dated 25.01.1996 under section 145(2) of the Income Tax ....
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.... to use on 28.3.97. The Deputy Chief Inspector of Boilers, Tiruchirapalli has certified that the boiler was erected on or before 26.3.97 and hydraulically tested to a pressure of 102 kg/cm2 and found satisfactory vide his order No.B/Rc 19320/95 dt.3.4.97". 8. It is the case of the assessee that the asset was put into use for the purpose of leasing business even before 31.03.1997. But the case of the assessee was negated by the assessing officer, holding that the assessee has not proved that they are eligible for 100% depreciation as a specialised category and they have also not proved that the asset was put into use before 31.03.1997. But, on appeal, the Commissioner of Income Tax (Appeals) upheld the order of the Joint Commissioner of Income Tax. Aggrieved over the same, the revenue has filed this appeal. 9. We have heard the learned counsel for both sides and perused the materials available on record. 10. It is the case of the revenue that the asset was actually put to use only on 06.05.1997 and in support of their contention, they have relied upon a letter from the Chief Engineer, Tamil Nadu Electricity Board, Tiruchirapalli to show that the permiss....
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....rovisions in section 33 provide that machinery or plant should be installed by the assessee in the premises used by it, or it is an asset or the said machinery or plant is an asset relating to the business carried on by the assessee, as the case may be, section 32A(2B) does not have any such stipulation. That is why the said Karnataka decision CIT v. Shaan Finance (P.) Ltd. [1993] 199 ITR 409, concludes by saying thus (at page 416) : "The benefit is given with reference to the actual user of the machinery, though the benefit may go to a person who does not exploit the machinery himself for manufacturing or producing any article. Such a situation is not entirely unknown in the field of taxation. If the object behind section 32A is understood as to encourage industrial activities and investment in capital goods to facilitate industrial developments, the provision would certainly bear the meaning we have attributed to it." Learned counsel for the Revenue also relies on section 32A, sub-section (5) (a), and contends that since the plant or machinery in the present cases has been leased out by the assessee, it is hit by the abovesaid provision in view of the fact tha....